What does the future of online gambling with stakes look like in India?


Before we get into the details, let’s first walk through the difference between a skill-based game and a chance-based game. Games of chance are banned in most states, but games of skill are not.

In a game of skill, the player invests their time in learning, practicing, and perfecting a skill. In its 1957 order, the Supreme Court stated that games of skill would be those where “success depends primarily on the superior knowledge, training, attention, experience and skill of the player “. Games can be a combination of skill and chance, but skill must be the predominant factor.

With IPL around the corner, fantasy gaming platforms such as Dream11 and Mobile Premier League have just received some good news in a state that is home to one of their major markets.

On February 14, 2022, the Karnataka High Court struck down certain provisions of the Karnataka Police (Amendment) Act 2021, by which the state government had banned online gambling involving monetary stakes.

This is a huge relief for India’s online skill games and fantasy sports industry. The judgment follows other similar judgments by the high courts of Rajasthan, Punjab, Haryana and Bombay which have recognized fantasy sports as games of skill and a legitimate business activity protected by the Constitution of India.

In October last year, the law prohibiting betting and betting in online games was notified by the government of Karnataka.

Karnataka law stipulated that “gambling” such as betting sites and online casinos should be prohibited. Additionally, he said “games of skill”, where there is a risk of the player losing money, should also be banned.

However, several Indian courts have previously called games such as fantasy sports, poker and rummy “games of skill” and ruled them legal. The Supreme Court also upheld Dream11’s online fantasy sports format as a “game of skill”.

One of the main grounds that Karnataka’s new law was challenged was that games of skill, if played for prizes or wagers, were bludgeoned with games of chance.

The gaming companies argued that according to a 1957 Supreme Court order, competitive games of skill should be considered commercial activities protected by Section 19(1)(g) of the Indian Constitution.

If the status of games of chance remains unchanged, with the judgment of February 14, at least for the moment, the inhabitants of Karnataka should be able to play games of skill online even if they are monetary stakes.

A win in Karnataka boosts industry morale. There is a thriving online gaming ecosystem based in Bangalore, the capital of Karnataka. In fact, the state is said to be home to at least 91 Indian game companies and developers.

To understand the business impact of this verdict, one must consider the size of the Indian gaming ecosystem. According to a 2021 report by venture capital firm Sequoia and management consultancy firm BCG, India’s mobile gaming industry will grow from $1.5 billion in revenue in 2020 to $5 billion by 2025. .

The report says that while Indian game companies initially made money from in-game advertising, 80% of the $1.5 billion generated from mobile games in 2020 came from real-money game spending and in-app purchases.

In fact, there are now over 300 million gamers in India.

Meanwhile, revenue from all gaming devices reached $1.8 billion in 2020, up 500% from 2016.

However, the relief provided by the Karnataka High Court may be short-lived. The bench clarified that the entire law is not invalidated and that the judgment will not prevent the legislature from introducing a new constitutionally compliant law against gambling.

After the verdict, Karnataka Home Minister Araga Jnanendra told a financial daily that the state government may draft a new law banning online gambling and betting.

Jnanendra said the government was studying the judgment in detail, focusing particularly on the sections of the law that were found to be unconstitutional.

The Home Secretary added that the state government would prefer to correct the shortcomings identified so that the new draft can be presented in court. According to him, the government remains determined to ban betting and gambling in online games with appropriate legislation.

The Supreme Court, in three separate judgments, set the record straight. In 1957 he said that games involving a certain level of skill should not be considered gambling. In 1968, it allowed establishments to collect a small fee to maintain and operate the same for games of skill, such as rummy. He said rummy involves considerable skill and is not a pure game of chance. In 1996 the court ruled that horse racing was a game of skill and therefore not gambling.


Comments are closed.